DEUTZ AG: Strong increase in revenue and earnings for DEUTZ in the first quarter

High level of new orders sustained

Strong increase in revenue generated across all regions and application segments

Double-digit increase in profitability

Group forecast for 2019 as a whole confirmed

COLOGNE / ACCESSWIRE / May 7, 2019 /

EUR million

Q1 2019

Q1 2018

YoY change

New orders

514.5

574.9

-10.5%

Revenue

452.8

414.5

+9.2%

EBIT

25.1

21.7

+15.7%

EBIT margin (%)

5.5

5.2

+30 bps

Net income

20.9

18.2

+14.8%

DEUTZ, one of the world’s leading manufacturers of innovative drive systems, has today published its final results for the first quarter of 2019.

“DEUTZ has made an excellent start to the year, and all regions and segments have played their part,” says CEO Dr Frank Hiller, summing up the Company’s strong showing at the beginning of 2019. “We have surpassed the outstanding results for revenue and earnings achieved in the first quarter of last year. We are also reaffirming the forecast for 2019 as a whole on the basis of the high level of orders on hand. Our new strategy for China and our initiatives aimed at increasing profitability and embracing new technologies mean that DEUTZ is well positioned now and for the future. DEUTZ remains on a growth trajectory and we are well on the way to achieving our medium-term targets for 2022.”

High level of new orders sustained
DEUTZ is continuing to benefit from the sustained strength of customer demand, receiving orders worth EUR 514.5 million in the first quarter of 2019. Although still at a high level, new orders were 10.5 per cent lower than the extremely robust volume reported for the prior-year period, which had been positively influenced by exceptional items. Compared with the fourth quarter of 2018, new orders were up by 27.4 per cent (Q4 2018: EUR 403.9 million). Orders on hand as at 31 March 2019 totalled EUR 497.6 million, which was 16.4 per cent higher than a year earlier.

Strong rise in revenue
The DEUTZ Group’s revenue advanced by 9.2 per cent to EUR 452.8 million in the first three months of 2019. All regions and application segments contributed to this growth. The Agricultural Machinery application segment registered a particularly strong revenue increase of 16.0 per cent. Revenue in the high-margin service business grew by 9.1 per cent. In the Americas and Asia-Pacific regions, DEUTZ reported revenue growth that was comfortably into double digits.

Substantial increase in operating profit
The DEUTZ Group’s operating profit rose by 15.7 per cent to EUR 25.1 million in the first quarter of 2019. This rise was largely due to the growth of revenue, a favourable shift in the product mix towards higher-value engines that meet the new exhaust emissions standards and positive currency effects. The EBIT margin improved from 5.2 per cent to 5.5 per cent during the reporting period.

Thanks to the rise in operating profit, net income went up by 14.8 per cent compared with the prior-year period to reach EUR 20.9 million. As a result, earnings per share increased from EUR 0.15 to EUR 0.17.

Segment: DEUTZ Compact Engines

EUR million

Q1 2019

Q1 2018

YoY change

New orders

409.3

492.9

-17.0%

Revenue

356.2

352.0

+1.2%

EBIT

18.5

17.0

+8.8%

EBIT margin (%)

5.2

4.8

+40 bps

Increase in revenue despite reassignment of the 2011 engine series to the DEUTZ Customised Solutions segment

Improvement in profitability due to higher revenue from new engine series as well as positive currency effects

DEUTZ Customised Solutions segment

EUR million

Q1 2019

Q1 2018

YoY change

New orders

96.9

76.7

+26.3%

Revenue

91.2

57.7

+58.1%

EBIT

12.8

7.7

+66.2%

EBIT margin (%)

14.0

13.3

+70 bps

Significant rise in new orders and revenue mainly attributable to the reassignment of the 2011 engine series to the DEUTZ Customised Solutions segment and to sales of higher-value engines

Improvement in operating profit for the segment primarily due to the reassignment of the engine series

Group forecast for 2019 confirmed
The continued strong demand from customers and current high level of orders on hand should provide a good degree of security for the DEUTZ engine business, particularly in the first half of the year. The Board of Management therefore confirms its forecast for 2019 as a whole, despite a generally challenging macroeconomic and geopolitical environment: revenue is expected to rise to more than EUR1.8 billion and the EBIT margin before exceptional items to at least 5.0 per cent. The payment of the final instalment of the purchase consideration from the disposal of the Cologne-Deutz site could result in an exceptional item that would increase earnings by around EUR50 million this year.

Conference call
Dr Frank Hiller, CEO, and Dr Andreas Strecker, CFO, will explain the results to analysts and investors at a conference call on 7 May 2019, 10am CET. You can watch the live webcast on the internet: https://www.deutz.com/en/investor-relations/.

Upcoming financial dates
1 August 2019: Interim report for the first half of 2019
7 November 2019: Interim management statement for the first to third quarter of 2019
12 March 2020: 2019 annual report / annual results press conference

Forward-looking statements
This investor news may contain certain forward-looking statements based on current assumptions and forecasts made by the DEUTZ management team. Various known and unknown risks, uncertainties and other factors may lead to material differences between the actual results, the financial position or the performance of the DEUTZ Group and the estimates and assessments set out here. These factors include those that DEUTZ has described in published reports, which are available at www.deutz.com. The Company does not undertake to update these forward-looking statements or to change them to reflect future events or developments.